Report
Dave Nicoski ...
  • Ross LaDuke
EUR 47.02 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Stick With Reflation & Reopening Theme

Our bullish outlook remains intact and is supported by the absence of breakdowns across major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) and ongoing positive market dynamics. Until this changes, we believe global equities are headed higher in the coming weeks and months.

· Market Dynamics Remain Positive. Our bullish outlook is supported by much more than simply a lack of support violations on major global indexes -- though this is a major factor input. Additional market dynamics supporting our bullish outlook include: (1) the US dollar (DXY) remains weak and is below key resistance levels at 91 and 92, (2) sovereign bond yields are bottoming, (3) emerging market equities are outperforming, (4) defensive Sectors continue to underperform, (5) commodities remain bullish (esp. crude oil, base metals, and copper), and (6) high yield spreads in the US and Europe are at multi-year narrows. As long as there are no reversals in these trends, our bullish outlook will remain in force and pullbacks should be bought.

· Actionable Theme: Reflation & Reopening. For several months we have recommended adding exposure to Energy, Industrial Manufacturing, Financials, and Materials Sectors, and it is increasingly likely that they are overtaking global leadership from growth-oriented Technology. In today's report we highlight actionable ideas within these Sectors, and also in Transportation and Consumer Discretionary -- add exposure. Within Discretionary, we make several new recommendations within the travel & leisure industry.
Underlyings
China Petroleum & Chemical Corporation Class H

Embraer S.A.

Embraer is a commercial aircraft manufacturing group. Co. is engaged in the development, production export and sale of commercial jet and propeller aircraft and in the provision of related support services, principally to the commercial airline industry worldwide. Co. is a supplier of defense aircraft for the Brazilian Air Force, and has supplied aircraft to armed forces in Europe, Asia, the U.S. and Latin America. Co. has also developed a line of executive jets and launched new executive jets in the entry-level, light, ultra-large and mid-light/mid-size categories. Co.'s aircraft models include ERJ's, EMB's, Super Tucano, F-5BR, AMX-T jet fighter, Legacy 600, the Phenom and others.

ENEOS Holdings Inc.

JXTG Holdings is a petroleum and metal industries holding company based in Japan. Co. was formed by the management integration of Nippon Oil and Nippon Mining Holdings. Co. comprises three core companies operating in the fields of Petroleum Refining and Marketing, Oil and Natural Gas Exploration and Production, and Metals. Co. conducts operations integrated from upstream resource development to petroleum refining and marketing, chemicals, copper smelting and refining, recycling and environmental services, and electronic materials. Co. operates in four business segments: energy, oil and natural gas exploration and production, metals, and others.

Komatsu Ltd.

Komatsu is engaged in the manufacture and sale of construction and mining equipment, utility equipment and industrial machinery. Co. operates in three business segments. Construction Machinery and Vehicles segment provides wheel loaders, hydraulic excavators, mini excavators, bulldozers, dump trucks, forklift trucks, forwarders, feller bunchers, harvesters, among others. Retail Finance segment is engaged in the provision of financing services for construction and mining equipment. Industrial Machinery and Other segment offers laser cutting machines, plasma cutting machines, press brakes, shears, transfer machines, machining centers, crankshaft millers, among others. .

Kubota Corporation

Kubota and subsidiaries are engaged in the manufacture of a comprehensive range of machinery and other industrial and consumer products, including farm equipment, engines, construction machinery, pipe-related products, environment-related products, and industrial castings. Farm equipment, construction machinery, ductile iron pipe, and certain other products are sold both in Japan and in overseas markets which consist mainly of North America, Europe, and Asia. Co. also provides water and sewage treatment plants, submerged membrane systems and biogas production systems for water treatment, as well as pulverizing facilities for solid waste treatment.

NWS Holdings Limited

NWS Holdings is an investment holding company. Through its subsidiaries, Co. is engaged in the investment in and/or operation of facilities, construction, transport and strategic investments; and the development, investment, operation and/or management of power plants, water treatment and waste management plants, roads as well as ports and logistics facilities. Co. possessed a business network in managing and operating 69 projects and two strategic investments in four segments, namely Roads, Energy, Water, and Ports and Logistics as at 30 June 2015. Co.'s service segments are: Facilities Management; Construction and Transport; and Strategic Investments.

Oil & Natural Gas Corp. Ltd.

Oil and Natural Gas is engaged in exploration, development and production of crude oil and natural gas. Co.'s business also includes niche areas like -processing of crude oil & natural gas; oil field services, transportation of the oil and natural gas, production of value added products like - LPG, Naphtha, Superior Kerosine Oil, ATF, C2-C3, etc., Refinery, Petrochemicals, Power, unconventional and alternate sources of energy. Co.'s five international locations as per oil & gas production are in Vietnam, Russia, Venezuela, Sudan, South Sudan, and Colombia. Co.'s five international locations as per oil & gas reserves are in Russia, Venezuela, Sudan, South Sudan, Myanmar and Vietnam.

OMV AG

OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).

PrairieSky Royalty Ltd

PrairieSky Royalty is engaged on leasing oil and gas fee lands and acquiring additional lands or interests, in each case to generate royalties.

REPSOL SA

Sulzer AG

Sulzer Sulzer specialize in pumping solutions, surface technology, separation, reaction, and mixing technology, as well as rotating equipment maintenance. Co.'s operations are organized along four divisions: Sulzer Pumps, which develops and supplies centrifugal pumps globally; Sulzer Metco, which is a global supplier of services and products for thermal-spray and thin-film surface technologies; Sulzer Chemtech, which is engaged in separation column and static mixing technologies; and Sulzer Turbo Services, which is a provider of repair and maintenance services for thermal turbomachinery and other rotating equipment.

Suncor Energy Inc.

Suncor Energy is an energy company. Co.'s operations include oil sands development and upgrading, onshore and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Co.'s segments include: oil sands, which develop and produce synthetic crude oil and related products through the recovery and upgrading of bitumen; exploration and production, which include offshore activity, and the exploration and production of crude oil, natural gas, and natural gas liquids; and refining and marketing, which include the refining of crude oil products, and the distribution and marketing of these and other purchased products, as well as a lubricants plant.

Thyssenkrupp AG

ThyssenKrupp is the parent company of the ThyssenKrupp Group. Co. has six business areas: Components Technology, which provides components for the automotive and machinery sectors; Elevator Technology, which supplies passenger and freight elevators, escalators and moving walks, passenger boarding bridges, stair and platform lifts; Industrial Solutions, which comprises the System Engineering and Marine Systems units; Materials Services, which focuses on materials distribution and technical services; Steel Europe, which develops, produces and markets flat carbon steel in the European market; and Steel Americas, which produces, processes and markets steel products in North and South America.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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